Pittsburgh Ranks High For Small Business Activity

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The Pittsburgh region is among the top 10 places in the U.S. for small business activity, according to a new study of entrepreneurial activity across the country.

Pittsburgh ranked eighth among 40 metropolitan regions in the report, "Main Street Entrepreneurship," released today by the Kauffman Foundation of Kansas City, Mo.

Ahead of Pittsburgh were New York; Boston and Providence, R.I., which tied for second place; San Francisco; Portland, Ore.; Miami; and Los Angeles.

At the bottom of the list were Houston, Phoenix, San Antonio, Las Vegas, and Riverside, Calif.

Unlike an earlier report by the same foundation that gave Pittsburgh extremely low marks for small business startups, the new index tracks small businesses that have been operating at least five years and the percentage of business ownership in the broader population.

The index defines small businesses as having between one and 50 employees.

Small businesses account for 63 percent of all firms in the U.S., the foundation said.

The Pittsburgh area's rate of small business ownership was 5 percent per 100,000 adults, just below the national average of 6 percent.

"Pittsburgh stands out very positively," said E.J. Reedy, director of research and policy at the Kauffman Foundation.

In a report by the foundation earlier this year on startup activity nationwide, Pittsburgh was dead last among the 40 metro regions. That report measured the rate at which individuals were starting businesses. "Pittsburgh kind of struggled," said Mr. Reedy.

"When you look at Main Street entrepreneurship, Pittsburgh looks much stronger."

The healthy number of established small businesses here could be a result of the region's heavy industrial heritage, he said.

"There are probably more medium-sized manufacturing companies in Pittsburgh that are very engaged in the economy."

Many small- to medium-sized businesses here supply larger manufacturers, said Mary McKinney, director of Duquesne University's Small Business Development Center.

"Pittsburgh has always had a small business mentality," she said. "The steel companies had small business suppliers and there's a history of business ownership, and making a living on your own and contributing to larger companies."

When the foundation earlier this year ranked Pittsburgh last among metro regions for startups, Ms. McKinney said she and others who work with small businesses were dismayed.

"Everyone was surprised. We thought they were leaving out a lot of stuff that happens here to encourage startups."

While the SBDC at Duquesne has had a steady flow of individuals seeking new-business counseling, she acknowledged less financing has been available to fund startups since the Great Recession began in 2007-08.

Even as the country emerged from the recession, "Capital was still touch and go and hasn't picked up," said Ms. McKinney.

Rhonda Carson-Leach, director of the urban and community entrepreneurship program at the University of Pittsburgh, said it's an ongoing challenge to stimulate new business creation in low-income areas of the region.

Though local universities and support organizations like the small business development centers provide strong programs for would-be entrepreneurs, they don't reach some individuals who could be promising business owners, she said.

"There are a lot of high-performing people coming out of [Carnegie Mellon University and Pitt] but that's not everybody," she said.

The Kauffman Foundation was founded in the 1960s by Ewing Marion Kauffman, a Kansas City drug company executive and former owner of the Kansas City Royals baseball team. He launched the team in 1969 when he bought an expansion franchise and based it in the city.